Jane Street Seeks Dismissal of Terraform Lawsuit Over UST-LUNA Collapse

Jane Street has requested a US court to dismiss a lawsuit filed by the bankruptcy estate of Terraform Labs, arguing that the claims it helped trigger the 2022 collapse of the TerraUSD stablecoin and its sister token Luna are unfounded. In filings submitted to the Southern District of New York, Jane Street and several employees stated that the case is an attempt to shift responsibility for the failure of the Terra ecosystem, which erased approximately $40 billion in value within days. The firm is urging the court to dismiss the complaint with prejudice, preventing Terraform from pursuing the same claims again. Jane Street contends that the core issues behind Terra's collapse have already been settled in court, citing criminal and civil cases against Terraform founder Do Kwon, who pleaded guilty to conspiracy and wire fraud. The firm argues that Terraform's lawsuit, filed in January, is an attempt to extract cash from Jane Street to compensate for a fraud perpetrated by Terraform itself. Terraform's lawsuit alleges that Jane Street engaged in insider trading, using nonpublic information to trade ahead of major moves, including large withdrawals from the Curve liquidity pool that preceded UST losing its dollar peg. Jane Street disputes this narrative, denying any role in the collapse and maintaining that Terraform's fraud scheme has already been prosecuted, adjudicated, and punished. The court's decision on Jane Street's motion could have significant implications for the assignment of responsibility for the collapse of the Terra ecosystem, which had a ripple effect across the crypto sector, contributing to failures at several firms exposed to the project.